Before you do, let's take a look at the pros and cons of each option.With a credit card consolidation loan, you work with a lender to combine all of your unsecured debt into one monthly payment.Only the most creditworthy applicants qualify for the lowest rates and longest loan terms.
In addition to streamlining your debts into a single payment, a debt consolidation loan may also offer you an interest rate that is lower than that charged by your creditors saving you money in interest charges.
This option can be especially attractive if you have outstanding debts at a relatively high rate of interest (for example, those charged on some retail store cards or credit cards).
alternative to a credit card consolidation loan, you can work with your creditors and your budget to develop a plan to wipe out debt on your own.
You might pay down your debts through a balance transfer or interest rate negotiation.
The lender will pay off your credit card bills, and in exchange you’ll enter into a loan agreement with the lender to pay back the money.
For a credit card consolidation loan to be worth your while, you’ll want a plan that offers a lower interest rate and/or lower monthly payments than you’re currently paying to your creditors.
Debt consolidation is bringing all your existing debts together into one new debt, which can help you manage your repayments and give you a clearer picture of your financial future.
You typically do this by taking out a new personal loan to repay your other existing debts, and then paying this new loan back over a set term.
If you’re one of the millions of Americans with overwhelming credit card debt, you may have looked into a credit card consolidation loan to tackle your debt.